Norway’s krone was trading at less than NOK 9 against the US dollar on Thursday, its strongest level since January. Currency analysts linked the rise mostly to higher oil and housing prices, and more market optimism.
On Thursday morning it cost NOK 8.94 to buy one US dollar. That compares to more than NOK 11 earlier this year.
“There’s been positive development in the oil market,” Nils Kristian Knudsen, an interest rate- and currency exchange strategist for Handelsbanken Capital Markets, told newspaper Dagens Næringsliv (DN).
Rising consumption and an expected decline in oil storage supplies boosted the price of Norway’s North Sea crude oil to more than USD 45 a barrel on Wednesday afternoon, and it was still trading up at USD 45.54 on Thursday morning. It marks the first time oil prices have passed the USD 45-mark since the Corona crisis hit Norway earlier this year, and that’s good news for the country’s most important industry.
Norway’s economy has also weathered the Corona storm better than many countries, and housing prices continue to rise. New figures released this week for July continued a trend of ever-higher housing prices all over Norway, and especially in Oslo and other cities. That has surprised analysts and not least Norway’s central bank, since it indicates confidence within Norwegian households despite all the Corona uncertainty.
Knudsen told DN that the rise in housing prices “has been stronger than Norges Bank predicted, it contributes towards pressing interest rates a bit up and that again provides some support for the Norwegian krone.” The central bank now may be more inclined to boost interest rates that were brought down to zero as a stimulus measure in May to counter Corona.
The Oslo Stock Exchange opened slightly down on Thursday but Knudsen notes a “more positive mood” in stock markets elsewhere. That’s tied, he said to expectations that US politicians will agree on new economic measures to support economic recovery.
Corona uncertainty remains high, however, after a rough week in Norway that has hurt the cruise industry’s recovery and resulted in sending Corona infection levels up again. State public health authorities in Norway fear a new wave of outbreaks that could force them to tighten up Corona containment measures again.
“It all depends on what consumer demand will be like and how strong economic growth will be,” Knudsen told DN.